Indonesia accounting & tax considerations in 2021

legal regulations and tax law in Indonesia Since 2003, Healy Consultants Group PLC assists our Clients to timely comply with their annual legal, accounting and tax obligations in Indonesia.

  • Tax rates

    • A flat 22% corporate income tax (CIT) applies to next table income for fiscal year 2020-2021. However, from 2022 a rate of 20% will apply.
    • Indonesian companies with annual turnover exceeding US$3.6million are eligible for a 50% tax reduction on the standard CIT rate for the proportion of the taxable income of the gross turnover up to US$330,000.
    • Small companies with annual gross turnover not exceeding US$330,000 are subject to a final CIT of 0.5% for a maximum of three years.
    • Businesses in so-called ‘pioneering industries’ receive a 100% CIT holiday of between 5 and 20 years depending on investment amount, and 50% reduction in CIT for two years thereafter.
    • Transfer or building or land is subject to a capital gains final tax at 2.5% for the property seller and 5% for the purchaser.
    • A 0.1% special provision of final income tax is imposed on the transfer of shares publicly traded on the Indonesia Stock Exchange.
  • Value Added Tax (VAT) and Luxury Goods Sales Tax (LST)

    • Standard VAT of 10% applies to the sale of goods and services in Indonesia.
    • Although export of goods is zero-rated, goods imported to Indonesia suffer 10% VAT.
    • Some goods, including luxury residences and motor vehicles, are subject to LST of between 10% and 125% depending on the item, upon import or delivery by the manufacturer.
    • VAT and LST returns must be filed monthly. Payment and filing dates are due no later than the last day of the month following the delivery of the taxable item.
  • Withholding taxes & DTTs

    • A standard 15% withholding tax is levied on dividends, interest and royalties paid to resident corporations.
    • A 20% withholding tax is applicable on dividends, interests and royalties paid to non-resident corporations and individuals. This tax rate can be reduced under a double tax treaty (DTT). Indonesia has DTTs with almost 70 countries including Belgium, Canada, France, Italy, Germany, Morocco, Norway, Qatar and Singapore.
    • A withholding tax applies to payments to resident individuals as follows i) 10% on dividends and ii) 15% on interest and royalties.
    • A standard 20% withholding tax is applicable on technical services, consulting services and management services rendered in Indonesia. This rate can be reduced under a DTT. For instance, the effective rate for Germany is 7.5%, 10% for Cambodia and Luxembourg and 5% for Switzerland etc.
  • Filing and payment due dates

    TaxesPayment DeadlineFiling Deadline
    • Withholding tax (Payroll)
    • Income tax
    10th of the following month20th of the following month
    • Value Added Tax (VAT)
    Prior to the tax return filing deadlineEnd of the following month
    • Corporate Income Tax
    On or before 30 April (fourth month after fiscal year-end)

  • Consequences for late/non-filing of taxes

    The Ministry of Finance is responsible for tax administration and can impose the below penalties:

    • IDR500,000 (approximately US$35) for late or non-submission of VAT returns.
    • IDR100,000 (approximately US$11) for late or non-payment of other monthly taxes due.
    • IDR1 million (approximately US$70) for late or non-submission of corporate income tax returns.
  • Tax credits and incentives

    • Businesses in pioneering industries and business sectors with special classification may qualify for:
      • 100% holiday on corporate income tax of between five and 20 years (depending on investment amount) and a subsequent 50% reduction in corporate income tax for two years thereafter.
      • A 50% reduction on standard corporate income tax for five years from start of operation for companies with a capital investment of between US$6.9 million and US$35.6 million, and a 25% reduction in corporate tax for the subsequent two years.
    • Businesses outside special classification may still apply for tax holidays by applying through the Online Single Submission (OSS) system.
    • The Ministry of Finance may also grant following tax concessions to Perseroan Terbatas (PT) companies with i) high investment or export activities and/or ii) high levels of local manpower and content:
      • A reduced withholding tax of 10% on dividends paid to non-resident entities, or the applicable rate as per the double tax treaty;
      • A carry forward of tax losses from five to ten years;
      • A reduced net taxable income of 30% of the amount invested in the form of tangible fixed assets, including land.
    • Profits, after tax, of Indonesian Permanent Establishments are exempt from Branch profit tax if the permanent establishment reinvests that profit within the same fiscal year.
  • Batam Free Trade Zone

    • Batam is Indonesia’s first Special Economic Zone (SEZ). Export-focused manufacturers in the SEZ enjoy a range of tax incentives including:
      • Zero value added tax (VAT) on imports;
      • Zero customs duties on machines, spare parts and raw materials imported to Batam for manufacturing purposes;
      • Zero customs duties on exports;
      • Zero sales tax on luxury goods (LST).
    • Unfortunately, companies registered in the Batam SEZ suffer a corporation tax of 30%.
    • However, companies operating in Batam SEZ can access a broad network of double tax treaties with countries including Australia, USA, United Kingdom, Germany, Vietnam, Philippines, Mauritius, Singapore, and Malaysia.

    For more information on Batam Free Trade Zone, visit this page.

  • Tax reporting, accounting, and auditing considerations

    • All companies incorporated in Indonesia must register for tax, obtain a tax number (NPWP) and file monthly and annual returns.
    • The standard Indonesian tax period is one calendar month. Companies must pay corporate income taxes monthly on the 15th of the following month.
    • Corporations must also file i) monthly tax returns on the 20th of the following month and ii) annually by the end of the third month following the end of the tax year.
    • The tax year in Indonesia is the calendar year. However, taxpayers can use accounting years different to the standard calendar year, determined by when the company was incorporated.
    • All companies, including dormant entities, must file monthly tax returns including i) VAT and LST (where applicable) ii) withholding tax and iii) payroll.
    • Indonesia Company Law mandates that financial statements be audited by an Indonesian registered public accountant if:
      • The entity’s assets exceed IDR50billion (approximately US$3.6million);
      • It is a public company or state-owned enterprise;
      • The company receives third-party funds, for example insurance companies and banks.
    • Indonesian companies that file for any particular tax refund will also trigger a tax audit from the Tax Directorate General.
  • Healy Consultants Group PLC fees for accounting and tax support

    Indonesia accounting and tax taskUS$
    Indonesia active company unaudited annual tax and accounting *2,300
    Indonesia dormant company unaudited annual tax and accounting950
    Indonesia active company audited annual tax and accounting *4,950
    Indonesia annual personal tax return1,500
    Average monthly bookkeeping services860
    Monthly VAT, WHT and Payroll reporting services (active entity)1,500
    Monthly VAT, WHT and Payroll reporting services (dormant entity)650

    Note: * For an active trading company, these accounting, audit and tax fees are an estimate of Healy Consultants Group PLC fees to efficiently and effectively discharge your annual company accounting and tax obligations. Following receipt of a set of draft accounting numbers from your company, Healy Consultants Group PLC will more accurately advise accounting and tax fees.

  • Monthly bookkeeping services

    Healy Consultants Group PLC’s monthly book-keeping services fee of US$860 includes i) receiving in Dropbox monthly invoices from our Client ii) labelling monthly bank statement transactions iii) preparing and submitting monthly income and expenses statements and iv) monitoring monthly profit levels to minimise annual tax.

  • External readings

Conclusion

It is important our Clients are aware of their personal and corporate tax obligations in their country of residence and domicile, and that they fulfil those obligations annually. Let us know if you need Healy Consultants Group PLC’s help to clarify your annual reporting obligations.

Contact us

For additional information on our accounting and legal services in Indonesia, please contact our in-house country expert, Ms. Chrissi Zamora, directly:
client relationship officer - Chrissi